The Pros & Cons of Life of Balance Credit Cards: What are the Benefits & Downsides of Lifetime Balance Transfers?

Lifetime balance transfer credit cards allow individuals to move over existing card debt to gain a lower interest rate. This gives many the breathing space they need to pay off what they owe at a lower rate and often in a quicker timescale. Unlike other kinds of balance transfers this kind of deal has no pre-set duration and lasts as long as it takes to repay borrowing. What are the advantages and disadvantages of a life of balance credit card?

The Advantages of Using Life of Balance Credit Card Deals

For some individuals this kind of balance transfer deal works better than alternatives such as zero percent offers. The benefits include:

  • The interest rate will generally be a lot lower than that given to a regular credit card.
  • The low rate will apply (as long as repayment conditions are met) until all of the balance transfer debt is paid off.
  • Some cards may not charge a balance transfer fee to sign up.
  • If a transfer fee is charged the individual will only have to pay it once which could work out cheaper than switching from one short-term 0% deal to the next.
  • In some cases it may be possible to get a lower interest rate than those given for other card debt payoff solutions such as unsecured loans.

This kind of deal may well suit individuals who carry a lot of card debt(s). Many other balance transfer offers only last for a set period of time and this may not be long enough to pay off all borrowings.

The Disadvantages of Using Lifetime Balance Transfer Credit Cards

It’s always wise to look at the downsides as well as the benefits when choosing financial products. The disadvantages of these deals include:

  • The lower rate of interest is only applied to the balance transfer debt and any new spending on the card may be given a far higher interest rate.
  • If the card company uses a negative payment hierarchy then interest charged on any new spending may accrue at an alarming rate as no repayment may go towards it until the balance transfer is paid off in full.
  • The temptation to relax because of the lower interest rate and to simply make minimum payments may not see debts dealt with quickly.

A life of balance transfer may well suit those with larger credit card debts who want to minimise their balance transfer costs and save time and money in debt repayment. Those considering this as an option may want to take a more in-depth look into how these deals work before making a final decision.

Bear in mind that lifetime balance transfer cards are not usually recommended for those that wish to also use them for general/continued spending. It may be worth looking at using a different product for new purchases such as a low interest credit card and focusing on repayment with the life of balance deal.